SCANDAL-HIT RBS - which is 82% state-owned after a £45 billion bailout - could be ready for privatisation this year, but at present prices that would mean a huge public loss.

PRIME MINISTER David Cameron today urged the management of the largely state-owned Royal Bank of Scotland to "accelerate" the process of strengthening the company in preparation for a return to the private sector.

Mr Cameron played down reports that the Government is preparing to dispose of its stake in RBS with a pre-election share give-away to voters.

The PM insisted he was "keen to examine all possibilities" for returning the bank to the private sector, but said he had not reached a view on how this should be done.

Scandal-hit RBS - which is 82% state-owned after a £45 billion bailout in 2008 - could be ready for privatisation this year, but at present prices that would mean a huge public loss.

The Liberal Democrats have championed the idea of a share give-away and it was reported at the weekend that Conservative ministers were also now examining the idea of handing it back to taxpayers in the form of shares worth £300-£400.

Party sources were reported as saying that Chancellor George Osborne saw continued ownership as politically "untenable" amid Libor-fixing and other scandals and was keen to end the state's role soon.

Asked whether the Government was planning a give-away, Mr Cameron said: "These are all interesting questions for the future. The first job is to turn around the performance of RBS and to strengthen its balance sheet, strengthen its business and that's what Stephen Hester and his team are doing.

Prime Minister David Cameron

"But I am keen to examine all possibilities for what we can do to put RBS in time back into the private sector. I can think of lots of interesting and exciting things to do but I don't have a fixed view.

"This Government is two and a half years in, it's a huge undertaking. It was a very badly damaged institution but I think they are doing the right thing.

"But obviously we want them to, where possible, accelerate the adjustments that they are making in terms of making it a strong organisation."